Trump tariff day setting stage for peak market uncertainty: Evercore
Market uncertainty is expected to reach its peak around the Wednesday tariff deadline, according to Evercore ISI. In a recent note, Julian Emanuel, the firm’s senior managing director, advised investors to resist being consumed by tariff concerns and instead focus on accumulating stocks. He believes that a little less uncertainty is all that is needed for the market to stabilize.
Emanuel drew a parallel between the current market pessimism and the regional bank failures of March 2023. He stated that the negative sentiment among investors is reminiscent of the uncertainty that prevailed before the Federal Reserve intervened to stabilize the situation. Despite the recent poor performance of the S&P 500 and Nasdaq, Emanuel remains bullish on the market.
The Nasdaq is currently 14% below its record high from December, but Emanuel sees this as an opportunity for investors. He recommends focusing on technology, communication services, and consumer discretionary sectors, which were the worst performers in the previous quarter. He believes that companies in these sectors will likely engage in stock buybacks, which could drive prices up.
On the other hand, Emanuel suggests avoiding sectors that have recently performed well. He noted that consumer staples and healthcare were strong performers in the first quarter, indicating that they may have been used as defensive plays. Despite the market turmoil, he is confident that the market will bounce back. His year-end price target for the S&P 500 is 6,800, suggesting a 21% gain from current levels.
Emanuel emphasized that clarity is not necessary for the market to recover, but rather a reduction in the extreme tariff-related scenarios. He remains optimistic about the market’s prospects and believes that the current uncertainty will subside in the near future.
In conclusion, Evercore ISI’s Julian Emanuel’s positive outlook on the market provides investors with a glimmer of hope amidst the prevailing uncertainty. By focusing on sectors with potential for growth and avoiding those that have already peaked, investors can navigate the current market conditions and potentially benefit from future gains.
